UseNet Service Loses Copyright Infringement Case

While a few NZB sites have been targeted before, this may be the first time a service that offers UseNet access has been dealt with a blow. In court, has lost their case against the RIAA. The case has been going on since 2007.

“While others claim to have huge download limits,” says, “we deliver unheard of download limits and incredible access to two huge geographically diverse server farms. But huge download limits are of no use if you can not get the material you are searching for.”

Things might change after this legal blow.

“This action arises out of allegations of widespread infringement of copyrights in sound
recordings owned by Plaintiffs…”the decision states (source contains built-in-browser version), “copies of which are available for download by accessing a network of computers called the USENET through services provided by Defendants, Inc.”

The court document continues, “Defendants’ cross-motion for summary judgment argues that they are entitled to the safe harbor protections of § 512(c) of the Digital Millennium Copyright Act (“DMCA”). All parties filed numerous additional motions to exclude certain testimony, as well as voluminous evidentiary objections. Plaintiffs opine that their motion for terminating sanctions alleges discovery abuse sufficient to require that I strike the Defendants’ answer and enter a default judgment in their favor (“Terminating Sanctions Motion”). For the reasons set forth below, Plaintiffs’ Terminating Sanctions Motion is granted to the extent discussed in this opinion, though not in its entirety; Plaintiffs’ motion for summary judgment is granted with respect to all claims; and Defendants’ motion”

More excerpts:

Copyright infringement via services:

There can be no dispute that Defendants’ services were used overwhelmingly for copyright infringement. Indeed, Plaintiffs’ expert has testified that, based on a statistical analysis, over 94% of all content files offered in music-related binary newsgroups previously carried by Defendant UCI were found to be infringing or highly likely to be infringing.

Moreover, not only is there rampant copyright infringement of musical works occurring on Defendants’ service in general, but there is direct undisputed evidence that Plaintiffs’ copyrighted sound recordings have been distributed and downloaded in violation of their copyrights.5 First, Plaintiffs’ evidence shows that both Plaintiffs’ forensic investigators and Defendants’ own former employees confirmed downloads of digital music files of Plaintiffs’ sound recordings from Defendants’ service.

Selling a service for the purpose of copyright infringement (A mistake made by Grokster):

The record in this case is replete with instances of Defendants and their employees specifically engendering copyright infringement and targeting infringement-minded users to become subscribers of Defendants’ service. First, Defendants’ own former employees have testified that their marketing department specifically targeted young people familiar with other file-sharing programs and suggested they try Defendants’ services “as a safe alternative to peer-to-peer file sharing programs that were getting shut down” due to copyright infringement lawsuits and resulting injunctions.

Wiping hard drives:

Based on the revelation of this new evidence, Plaintiffs promptly filed a motion to compel
production of responsive documents stored on Defendants’ employee hard drives, and requested an extension of the discovery period. A hearing was held before Magistrate Judge Katz on October 27, 2008 to address Plaintiffs’ motion and Defendants’ failure to produce discovery. At this hearing, Defendants’ counsel acknowledged for the first time that he was in possession of seven computer hard drives that had belonged to Defendants’ employees (the “Seven Hard Drives”). October 27, 2008 Hearing Transcript (“Oct. Tr.”) at 13:9-22. Initially, Defendants conceded that four of the Seven Hard Drives had had their contents deleted or “wiped” and suggested they would produce documents from the remaining three drives.

The court concluded that appropriate damage awards would be determined by Magistrate Judge Katz.

This default judgement could easily be seen as a major blow to UseNet service providers. For years, it was indeed common knowledge amongst those in the know that UseNet is practically immune from trouble. The defendants argued that they were under the safe harbour provisions of the DMCA, but the court didn’t buy it.

Because of all this, the once seemingly invulnerable service of UseNet, at least for inside the United States, isn’t so invulnerable anymore. Given that so few actions against UseNet have been taken, many might still see UseNet as a safe alternative compared to other alternatives, but for UseNet services in the United States, this case could spell trouble for the rest of the existing services on US soil.

Still, there’s been no known case, at least to our knowledge, that a UseNet user was ever busted for copyright infringement using UseNet, but it might be a little more tricky to connect to UseNet if other US based UseNet services start folding in a similar fashion to when an NZB site was targeted by the MPAA (many others voluntarily shuttered in response).

Regardless of what happens in the long run, this could be seen as the biggest blow to the UseNet network – legally speaking – to date.

[Hat tip: Ray Beckerman]

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